Thoughts on the State of the Union Address
I could not watch the speech – I just get too frustrated with the posturing and the phony applause. So I read the transcript. Based on that, I have a few thoughts about what President Obama said. I show a picture here of the good, the bad and the ugly. I have to admit, I didn't see anything good in the address, just lots of bad and ugly.
I could not watch the speech – I just get too frustrated with the posturing and the phony applause. So I read the transcript. Based on that, I have a few thoughts about what President Obama said. I show a picture here of the good, the bad and the ugly. I have to admit, I didn't see anything good in the address, just lots of bad and ugly.
The first misstatement, but one that economists also are debating, is whether the massive government intervention in the economy saved the economy from a great depression. I contend it did not; like with the Great Depression, the initial shock would have been a good recession had the government not gotten involved. Banks should have failed not been bailed out; same with auto companies; same with all others “too big to fail.” The President says “ …the worst of the storm has passed.” As I have stated in a recent post, I am not sure that is the case. But there is no doubt that many people are without jobs, others have experienced pay cuts and furloughs and reduced hours and lesser benefits. Yes people are frustrated – but I think it is because the Obama Administration has tried to cram down its policies no matter how the public felt about it.
The Administration extended or increased unemployment benefits for more than 18 million Americans, the President stated. The problem is that this extends unemployment. It sounds harsh and perhaps cruel, but paying people to be unemployed keeps them unemployed. The nonsense about cutting taxes for 95 percent of the public and not raising taxes for anyone is just that, nonsense. What about the increased taxes on cigarettes? Obama coes not call fees taxes and sin taxes don't count. It is just rhetoric and semantic definitions -- nonsense.
Obama proposed that “…we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses ..credit..”. First, what funds did Wall Street banks repay? Wasn’t it simply money created by the Federal Reserve out of thin air? Then what actually occurred was that the Federal Reserve lent out money that cost it nothing and then got principle and interest back. The Federal Reserve made a profit. But, the Federal Reserve transfers some of that profit to the Treasury which goes to spending already committed. So how can we take that money and now spend it again? Isn’t that simply another increase in government spending and more debt or additional money printing?
The President wants to undertake spending on infrastructure. This mimics the policies undertaken by Japan during the last 15 years. Japan decided to get itself out of its recession by spending on infrastructure. After 15 such stimulus plans, Japan remains mired in its second “lost decade”. And, Obama and Biden went to Florida today, to announce $8 billion spending for fast trains. Wow, what an extravagant waste of taxpayer funds. And note, the states not getting part of this $8 billion includes Arizona, even though Phoenix is much larger than Las Vegas, and the corridor between Phoenix and Tucson would look like a planner's dream for fast trains.
In addition, Obama wants serious financial reform, whatever serious means. The problem is that the financial system was regulated when Barney Frank and Chris Dodd pressured Fannie and Freddie to extend subprime loans – that is to purchase subprime mortgages. Regulation is the problem not the answer.
Obama says “we need to encourage American innovation.” Wow, that must mean to cut taxes on companies. No, it means government spending – “we made the largest investment in basic research funding in history..” If these projects had profit potential they would not need government spending. But the problem is that many of the research projects were ludicrous.
One of the most foolish statements made was “We will double our exports over the next five years…using a National Export Initiative…” Cutting taxes and reducing costly regulations would allow businesses to lower prices and thus sell more. Perhaps what the President meant is that his policy of spending a rising debt will reduce the value of the dollar – this will stimulate exports. Is that what the Preside called the National Export Initiative – is it simply another name for increased debt and thus a reduced value for the dollar?
College tuition is high – to those paying for college. Automobiles aer expensive -- to those buying cars. So what happens when the Administration provides subsidies for college – demand will rise and colleges will raise tuition further. Why are more people being paid to attend college -- perhaps without government interference they would find some other training more valuable. The President also proposes that any loans undertaken will not have to be repaid if the borrower does public service. Oh boy, all we need is more government employees. Why do we want people to do government service?
In the speech Obama said he will continue pursuing his health plan because many millions lose insurance every day. Well, since insurance is tied to employment, when employment goes down, people lose insurance. An easy fix is to untie insurance from employment. Do we need 2000 pages to state that and a few other things?
The speech is no different than most State of the Union Addresses. They contain promises of larger government, reduced liberties, and more nanny state. After reading the transcript I am very happyI did not watch the speech.
The Administration extended or increased unemployment benefits for more than 18 million Americans, the President stated. The problem is that this extends unemployment. It sounds harsh and perhaps cruel, but paying people to be unemployed keeps them unemployed. The nonsense about cutting taxes for 95 percent of the public and not raising taxes for anyone is just that, nonsense. What about the increased taxes on cigarettes? Obama coes not call fees taxes and sin taxes don't count. It is just rhetoric and semantic definitions -- nonsense.
Obama proposed that “…we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses ..credit..”. First, what funds did Wall Street banks repay? Wasn’t it simply money created by the Federal Reserve out of thin air? Then what actually occurred was that the Federal Reserve lent out money that cost it nothing and then got principle and interest back. The Federal Reserve made a profit. But, the Federal Reserve transfers some of that profit to the Treasury which goes to spending already committed. So how can we take that money and now spend it again? Isn’t that simply another increase in government spending and more debt or additional money printing?
The President wants to undertake spending on infrastructure. This mimics the policies undertaken by Japan during the last 15 years. Japan decided to get itself out of its recession by spending on infrastructure. After 15 such stimulus plans, Japan remains mired in its second “lost decade”. And, Obama and Biden went to Florida today, to announce $8 billion spending for fast trains. Wow, what an extravagant waste of taxpayer funds. And note, the states not getting part of this $8 billion includes Arizona, even though Phoenix is much larger than Las Vegas, and the corridor between Phoenix and Tucson would look like a planner's dream for fast trains.
In addition, Obama wants serious financial reform, whatever serious means. The problem is that the financial system was regulated when Barney Frank and Chris Dodd pressured Fannie and Freddie to extend subprime loans – that is to purchase subprime mortgages. Regulation is the problem not the answer.
Obama says “we need to encourage American innovation.” Wow, that must mean to cut taxes on companies. No, it means government spending – “we made the largest investment in basic research funding in history..” If these projects had profit potential they would not need government spending. But the problem is that many of the research projects were ludicrous.
One of the most foolish statements made was “We will double our exports over the next five years…using a National Export Initiative…” Cutting taxes and reducing costly regulations would allow businesses to lower prices and thus sell more. Perhaps what the President meant is that his policy of spending a rising debt will reduce the value of the dollar – this will stimulate exports. Is that what the Preside called the National Export Initiative – is it simply another name for increased debt and thus a reduced value for the dollar?
College tuition is high – to those paying for college. Automobiles aer expensive -- to those buying cars. So what happens when the Administration provides subsidies for college – demand will rise and colleges will raise tuition further. Why are more people being paid to attend college -- perhaps without government interference they would find some other training more valuable. The President also proposes that any loans undertaken will not have to be repaid if the borrower does public service. Oh boy, all we need is more government employees. Why do we want people to do government service?
In the speech Obama said he will continue pursuing his health plan because many millions lose insurance every day. Well, since insurance is tied to employment, when employment goes down, people lose insurance. An easy fix is to untie insurance from employment. Do we need 2000 pages to state that and a few other things?
The speech is no different than most State of the Union Addresses. They contain promises of larger government, reduced liberties, and more nanny state. After reading the transcript I am very happyI did not watch the speech.
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